The Hindu Business Line : IDR listing norms soon

Mr Sudev C. Das (second from left), Executive Director, SEBI, at a conference on `Indian Capital Market-2004' at the Indian School of Business on Saturday in Hyderabad. Mr S.R. Ramesh (right), Executive Director, Investment Banking, Kotak Mahindra Capital, Ms Susan Thomas, Professor, ISB, and Mr C. Parthasarathy (left), Chairman and Managing Director, Karvy Consultants, also participated in the conference. — A. Roy Chowdhury

Hyderabad , Oct. 30

FOLLOWING heightened interest from foreign institutional investors to invest in Indian Depository Receipts (IDRs), the Securities and Exchange Board of India is preparing the listing and disclosure norms for IDRs and proposes to announce them shortly, the SEBI Executive Director, Mr Sudev C. Das, said.

"The disclosure norms for foreign firms to raise funds in the domestic market through IDRs are almost ready and we may release before the year-end," Mr Das said here on Saturday, at the `Indian Capital Markets Conference, 2004', organised by the Indian School of Business.

He said the issue pertaining to investor protection guidelines for the foreign companies took time. He said the Department of Company Affairs had released its own guidelines in March for firms entering the IDR market and had set a requirement of $100-million paid-up capital.

Mr Das said SEBI was likely to impose stringent disclosure norms in the case of IDRs since it would be difficult to track vanishing companies from abroad.

According to the Chairman of Karvy Consultants, Mr C. Parthasarathy, the primary market has been booming and, with strong macro economic factors in place, the boom was expected to continue.

"Look at the number of applications from Maruti's IPO and that of NTPC's IPO. The retail investor community has been growing by leaps and bounds. Even the FIIs are excited about the numbers. While IPO of Maruti had attracted about 2.80 lakh applications, NTPC's IPO had attracted over 15 lakh applications," he said.

Stating that the support infrastructure should be raised to the growing investor requirements, he said the physical refund after the allotment process was taking time in view of lack of infrastructure in the banking system. He stressed the need to introduce electronic clearing system for refund to the investing community at the earliest.

Echoing similar views on the primary market segment of the Indian capital markets, the Executive Director, Investing Banking, Kotak Mahindra Capital, Mr S. Ramesh, said 2004 so far has been the busiest year for capital markets.

Apart from suggesting to the regulator to improve the private placement market and encourage simultaneous offerings, he stressed on the need to re-engineer the primary market segment.

Viewing that the Dutch Option would be a more relevant method of book building where there is a single bucket of investors, the Enam Financial Consultants representative, Mr Mahesh Chhabria, said, "Our structure of the market and regulatory framework available does not support a Dutch model of auction."

Stating that the bidding software of BSE and NSE lacked uniformity and the consolidate book online and category-wise break-up was not available, he suggested improving the bidding software to attain uniformity and displaying online combined book with category-wise break-up.

Expressing concern over the bunching of issues in a short timeframe, Mr Chhabria favoured encouraging spacing of issues.

Mr Chhabria was also concerned about the poor revenues to the broking community owing to lower brokerages that may not even cover costs. He stressed on the need to provide minimum out-of-pocket expenses to meet the cost of form distribution and bidding infrastructure.

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